Telangana High Court

M/S. Patel Integrated Logistics ... vs M/S. Vikkys Agrisciences Private ... on 1 May, 2025

Author: G.Radha Rani

Bench: G.Radha Rani

         THE HONOURABLE Dr.JUSTICE G.RADHA RANI

             CITY CIVIL COURT APPEAL No.452 of 2018

JUDGMENT:

This appeal is filed by the appellant-defendant aggrieved by the

judgment and decree dated 16.03.2018 in O.S No.638 of 2016 on the file

of the IV Senior Civil Judge, City Civil Court, Hyderabad.

2. The respondent is the plaintiff.

3. For the sake of convenience, the parties are hereinafter referred

as arrayed before the trial court.

4. The plaintiff filed the suit for recovery of money of

Rs.14,00,000/- with interest at 12% per annum from the date of decree till

realization with costs. The plaintiff contended that it was a private limited

company doing the business of marketing and selling of seeds. It was

having agents all over India for marketing the products and one of its

marketing agent, by name, M/s. Om Sai Agro Marketing was located at

Lucknow. During the course of its business, the plaintiff engaged the

services of the defendant for transportation of products by its agents to

Hyderabad and thus, four trucks load of agricultural seeds of maize were

transported to Hyderabad on 16.07.2014, 17.07.2014, 23.07.2014 and

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25.07.2014. The freight charges amounting to Rs.2,23,083/- was payable

at the dispatch point. The said goods were delivered to the address of the

plaintiff at Hyderabad in August, 2014. The defendant did not come

forward to receive the freight charges from the plaintiff. In the meanwhile,

the plaintiff also engaged the services of the defendant for transportation of

the 5th truck of maize seeds and the same was dispatched through

consignment No.F410247 dated 29.09.2014. Even after waiting till

December, 2014, the said stocks were not delivered by the defendant to the

plaintiff. After verification and confirmation with the consignor, the

plaintiff corresponded with the defendant about non-delivery of 5th

consignment which was of a value of Rs.20,00,000/-. The said stocks were

perishable in nature as the seeds had to be protected and kept in moderate

temperature in cold storage, otherwise they would be damaged and not

useful. Through the correspondence, the plaintiff realized that the

defendant had illegally detained and withheld the stocks sent through them

in their godown and demanded the plaintiff for payment of freight charges

and also issued notices to the plaintiff on 04.02.2015 acknowledging the

receipt of the consignment and also expressed its intention to declare the

consignment as unclaimed under Section 15 (1) of the Carriage by Road

Act, 2007 and to sell the consignment if the amounts were not paid within

seven days and that he would auction the goods worth Rs.20,00,000/- for

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recovery of Rs.2,79,879/-. The plaintiff had given reply notice through

their counsel on 11.02.2015 by narrating the true facts and also brought to

the notice of the defendant that the goods had to be safeguarded and

protected to avoid germination as the entire material would lose its value

and that the defendant could not withhold the stocks without delivering the

consignment to the plaintiff causing enormous loss to the plaintiff and

expressed through the legal notice that the plaintiff was ready to pay the

freight charges and requested to deliver the truck load of maize seeds

immediately to avoid further complications and warned the defendant that

if the material was damaged, it would be worthless and the damages had to

be paid by the defendant. The defendant communicated to the plaintiff by

letter dated 25.03.2015 that auction would be held on 10.04.2015 and that

the bids would be called before 06.04.2015 and invited the plaintiff for

participation in the same. The plaintiff further submitted that the defendant

filed Company Petition No.114 of 2016 under Section 433(e)(f) and 439(c)

of the Companies Act for winding up of the plaintiff company. The

plaintiff contended that the defendant could not retain the stocks consigned

through it and could not put them to auction and realize the amounts and

again claim for the freight charges instead of returning the remaining

balance received by putting to auction of the stocks. As such, he was

entitled to claim damages from the defendant, but was confining itself for

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the loss of the value of the goods by deducting the amounts payable

towards freight charges, which would come to Rs.14,00,000/- as per the

books and statement.

5. The defendant filed written statement admitting that the plaintiff

had engaged his services for transportation of its agricultural seeds and

booked the consignment under five trucks on 16.07.2014, 17.07.2014,

23.07.2014 and 25.07.2014 and 29.09.2014 and agreed to pay an amount

of Rs.2,79,879/- and assured the defendant that as and when the defendant

delivered the seeds at Hyderabad, the plaintiff company would pay the

delivery charges upon raising the invoices at Hyderabad. As per the terms

and conditions agreed upon between them, the defendant company had to

deliver the material from Kanpur to Hyderabad. The plaintiff company fell

due an amount of Rs.2,79,879/- to the defendant as such, the defendant

company filed Company Petition No.114 of 2016 before the High Court to

wind up the plaintiff company and to appoint an official liquidator to take

possession and assets of the plaintiff company and the same was pending.

The defendant further submitted that the consignment pertaining to

F410247 dated 29.09.2014 worth of Rs.10,00,000/- reached the delivery

location on 09.12.2014. The defendant tried to deliver the said

consignment on 10.12.2014, but the plaintiff refused to take the

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consignment, as such the same was declared as unclaimed. The defendant

sent an E-mail dated 29.11.2014 to the plaintiff directing the plaintiff to

pay the transportation charges towards transportation of seeds through five

trucks. The defendant by letters dated 09.01.2015 and 20.03.2015

requested the plaintiff to receive the material and to pay the transportation

charges. But, there was no positive response from the plaintiff to the

above letters. Inspite of several reminders and requests, the plaintiff

company defaulted in payment of transportation charges to the defendant.

The plaintiff company issued a letter dated 10.01.2015 wherein instead of

agreeing to pay the transportation charges further demanded the defendant

for delivery of the consignment immediately at the destination which was

not justifiable, as such prayed to dismiss the suit.

6. Basing on the above pleadings, the trial court i.e. the IV Senior

Civil Judge, City Civil Court, Hyderabad framed the issues as follows:

i) Whether the plaintiff is entitled to recover the amount of Rs.14,00,000/- from the defendant together with interest?

ii) To what relief?

7. The Regional Manager of the plaintiff company was examined as

PW.1 and Exs.A1 to A16 were marked on behalf of the plaintiff. The H.R.

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Manager of the defendant company was examined as DW.1 and Ex.B1 was

marked on behalf of the defendant.

8. On considering the oral and documentary evidence on record, the

trial court decreed the suit in part against the defendant with costs for a

sum of Rs.7,76,917/- and directed the defendant to pay the said amount

within two months from the date of the judgment, failing which ordered

that the plaintiff would be entitled for interest at 6% per annum from the

date of judgment till the date of realization.

9. Aggrieved by the said judgment and decree, the defendant

preferred this appeal.

10. Notice sent to the respondent-plaintiff was returned with an

endorsement as 'unclaimed'. As such, considering it as deemed service,

this Court proceeded to decide the appeal on merits.

11. Heard Ms. Samhitha Nimmada, learned counsel representing

Sri Vivek Jain, learned counsel on record for the appellant-defendant.

12. The learned counsel for the appellant-defendant contended that

the trial court erroneously decreed the suit without considering the rights

and obligations of the parties to the contract and that the respondent

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breached the contract by non-payment. Without considering the plea of the

appellant-defendant that it had rightly withheld the 5th truck since the

respondent-plaintiff failed to pay the transportation charges for the

previously delivered four trucks, partly decreed the suit. The appellant-

defendant was not responsible for the damage caused to the goods since it

was the respondent-plaintiff who breached the contract. In the entire

judgment of the trial court there was no reference to breach of contract or

assessment of rights and obligations of the parties to the contract. It was

first necessary to ascertain the point of time the payment of the four trucks

became due. As per the case of the respondent-plaintiff itself, freight

charges have to be paid at the dispatch point, but the respondent-plaintiff

had set up a different case in its cross-examination claiming that the

payment was to be made within 45 to 90 days. Even assuming that the

business between the appellant-defendant and the respondent-plaintiff was

done on credit basis, the maximum time period for payment was 90 days

and the said time period ended in December, 2014 from September, 2014.

The trial court erred in not considering the inconsistencies in the

respondent-plaintiff's case as to when the freight charges became due. The

respondent-plaintiff, failed to discharge the burden of proof laid upon them

that the appellant breached the contract. The appellant was entitled to

withhold the delivery of 5th truck by exercising the right of lien under the

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Carriage by Road Act, 2007 and relied upon the judgment of this Court in

Pulavarthi Sitarama Murthy and another v. Bangaru Sobhanadri and

another1, wherein the High Court had dismissed the plaintiff's case for

damages and held that breach of contract had to be proved by the plaintiff

prior to seeking the damages. She further relied upon the judgment of the

Hon'ble Apex Court in Tarini Kamal Pandit and others v. Prafulla

Kumar Chatterjee (dead) by Legal Representatives 2 on the aspect that

pure question of law not involving any investigation of facts can be raised

at any stage.

13. Now the points for consideration are:

i) Whether the respondent-plaintiff is entitled to recover the amount of Rs.14,00,000/- as claimed for?

ii) Whether the trial court committed any error in decreeing the suit in part holding the defendant liable to pay damages of Rs.7,76,917/- with costs?

14. Point No.1:

The plaintiff filed the suit for damages on the ground of breach of

contract. To ascertain whether a party is liable for pecuniary loss or not,

the court first need to look into the rights and obligations of the parties to

the contract and whether the loss suffered by the aggrieved party was

CRP No.88 of 1949 dated 14.07.1950

1979 (3) SCC 280

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because of the breach committed by the other party and thereafter proceed

to quantify the damages.

15. As seen from the facts of the case, there was no dispute that the

plaintiff engaged the services of the defendant for transportation of

agricultural seeds of maize from his agent at Kanpur to Hyderabad and

four trucks load of seeds were delivered on 16.07.2014, 17.07.2014,

23.07.2014 and 25.07.2014. It was also not in dispute that the 5th truck of

maize seeds was dispatched through consignment No.F410247 dated

29.09.2014 and the plaintiff was due an amount of Rs.2,79,879/- to the

defendant towards freight charges of consignment of five trucks. It was

also admitted that the freight charges for the earlier four trucks were not

paid by the plaintiff to the defendant by the date of consignment of the 5th

truck.

16. The Regional Manager of the plaintiff company examined as

PW.1 admitted that the freight charges amounting of Rs.2,23,083/- for four

trucks was payable at the dispatch point and that the said goods were

delivered at their address in Hyderabad in August, 2014. His contention

was that they had booked the consignment for transportation of maize and

other crop seeds on 29.09.2014, but even though they waited till

December, 2014, the said stocks were not delivered by the defendant to

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their Hyderabad address. He stated about the letter addressed by their

company to the defendant on 10.01.2015 marked under Ex.A3 requesting

to deliver the consignment held by them immediately at the addressed

destination and to get their payment through office. In the said letter itself,

in the first line, it was mentioned that the letter was addressed with

reference to the letter addressed by the defendant on 27.12.2014 regarding

the pending dues. Thus, no efforts were made by the plaintiff company to

pay the due amount of Rs.2,23,083/- payable by them for the four trucks

before seeking delivery of the goods consigned through 5th truck and

further asked the defendant to deliver the consignment of the 5th truck and

then thereafter, they would clear the dues. PW.1 in his cross examination

admitted that the four trucks were delivered and that they received the

invoices but the amount was not paid. With regard to the mode of

payment, he stated that after door delivery of products they received the

invoices from the defendant and thereafter within 45 to 90 days they used

to make the payments. This part of the evidence of PW.1 was against his

own pleadings that the amount was payable at the dispatch point. Even if

the same is considered as true, the period of 90 days would end by

December, 2014 from the date of the 5th consignment on 29.09.2014.

Ex.A2 itself would disclose that the correspondence was initiated by the

defendant to the plaintiff regarding the pending dues on 27.12.2014 and it

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was not the plaintiff who approached the defendant for delivery of goods

by making payment of the due amount. The correspondence made by the

plaintiff to the defendant under Ex.A2, A3 and A7 seeking delivery of the

goods without making any payment for the goods received by them for the

earlier consignments is untenable, as admittedly, the four trucks were

already delivered in August, 2014 and the defendant had discharged its

obligation under the contract. It was the plaintiff who breached the

contract by not paying the freight charges for the already delivered four

trucks even after the amounts became due.

17. As seen from Section 15 of the Carriage by Road Act, 2007, the

common carrier of the goods had lien over the goods when the consignee

fails to make payment of the freight. Section 15 of the Carriage by Road

Act, 2007 reads as follows:

"15. Right of common carrier in case of consignees default:-

(1) If the consignee fails to take delivery of any consignment of goods within a period of thirty days from the date of notice given by the common carrier, such consignment may be deemed as unclaimed:

Provided that in case of perishable consignment, the period of thirty days shall not apply and the consignment shall be deemed unclaimed after a period of twenty--four hours of service of notice or any lesser period as may be mutually agreed to by and between the common carrier and the consignor.

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(2) In the case of an unclaimed consignment under sub-section (1), the common carrier may,

(a) If such consignment is perishable in nature, have the right to sell the consignment; or

(b) if such consignment is not perishable in nature, cause a notice to be served upon the consignee or upon the consignor if the consignee is not available, requiring him to remove the goods within a period of fifteen days from the date of receipt of the notice and in case of failure to comply with the notice, the common carrier shall have the right to sell such consignment without any further notice to the consignee or the consignor, as the case may be.

(3) The common carrier shall, out of the sale proceeds received under sub-section (2), retain a sum equal to the freight, storage and other charges due including expenses incurred for the sale, and the surplus, if any, from such sale proceeds shall be returned to the consignee or the consignor, as the case may be.

(4) Unless otherwise agreed upon between the common carrier and consignor, the common carrier shall be entitled to detain or dispose of the consignment in part or full to recover his dues in the event of the consignee failing to make payment of the freight and other charges payable to the common carrier at the time of taking delivery."

18. Thus, the defendant is entitled to detain or dispose of the

consignment in part or in full to recover his dues in the event of the

consignee failing to make payment of the freight payable to the common

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carrier. Thus, the defendant had not committed any breach of contract

entitling the plaintiff to claim damages.

19. But, however, as seen from Section 15 (3) of the Act, though the

common carrier had the right to sell the consignment, he shall out of the

sale proceeds received under Section 15 (2) can retain the sum equal to the

freight, storage and other charges due including the expenses incurred for

the sale but the surplus from such sale proceeds shall be returned to the

consignee. But, the evidence of DW.1 is silent on this aspect. Though the

correspondence made between the parties would disclose that the

defendant addressed a letter to the plaintiff on 25.03.2015 under Ex.A5

asking the plaintiff to participate in the bid stating that an auction would be

held on 10.04.2015, no evidence was adduced as to for what amount the

goods were sold and the expenditure incurred by them for issuing

notification, conducting auction etc.

20. The plaintiffs pleaded that the worth of the goods transported

through the 5th consignment was of a value of Rs.20,00,000/-, but the

statement filed by them marked under Ex.A6 would show the value of the

goods as Rs. 14,12,528/-. PW.1 admitted in his cross examination that

though the worth of the product in the 5th consignment was shown as

Rs.14,00,000/- in Ex.A6 statement, it was shown in the delivery challan as

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Rs.10,00,000/-. PW.1 also admitted that Ex.A6 was a self prepared

document and that they had not stated the value of the goods in the legal

notice issued by them to the defendant though they made the

correspondence 2 to 3 times. As the delivery challan dated 25.09.2014

marked under Ex.A16 pertaining to F410247 would disclose the value of

the goods as Rs.10,00,000/-, the same can only be taken into consideration.

As both the parties admitted that the freight charges for delivery of five

trucks would amount to Rs.2,79,879/-, the said amount can be deducted by

the defendant. As the defendant must have incurred some amount towards

the expenses for issuing notification, conducting auction etc., he is entitled

to an amount of Rs.20,000/- (approximately assessed in the absence of any

evidence adduced by them) in addition to the amounts due to them. Hence,

the defendant need to pay the balance amount of Rs.7,00,121/-

(Rs.10,00,000/- - Rs.2,99,879/- (Rs.2,79,870 + Rs.20,000/-)) under the

principle of unjust enrichment. It was unjust for the defendant to keep the

benefit as it is against the principles of fairness and equity. As the

defendant failed to return the balance amount received by him, the plaintiff

is entitled to claim the same. As such, this Court is of the view that the

plaintiff is entitled for recovery of the balance amount of Rs7,00,121/- only

from the defendant which was withheld by the defendant after deducting

the amounts due to them. Point No.1 is answered accordingly.

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21. Point No.2:

Though the trial court had not discussed the rights and obligations of

the parties to the contract and which party committed breach and whether

the loss suffered by the aggrieved party was because of the breach

committed by the other party, came to a right conclusion that the plaintiff

was entitled for the loss of value of the goods sold by the defendant after

deducting the freight charges. The observations of the trial court that non-

payment of the charges for the first four trucks would not automatically

give any right to the defendant to withhold the products, is not correct.

The trial court had not considered the provisions of the Carriage by Road

Act, 2007 under which defendant has a right of lien to recover his dues.

The said provision was also mentioned by the defendant in their

correspondence to the plaintiff, marked by the plaintiff himself, under

Ex.A3. The observations of the trial court that the defendant failed to

deliver the products inspite of several correspondence and caused loss by

withholding the charges payable by the plaintiff for the four trucks, are

incorrect and against the law on this aspect. As such, the same are liable to

be set aside. The observation of the trial court that, as the goods in the

fifth truck were not delivered, the defendant was not liable for the said

amount, is also not correct as the defendant exercised his right of lien over

the products and he had transported the goods all the way from Kanpur to

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Hyderabad. The trial court deducting an amount of Rs.2,23,083/- towards

the freight charges of only four trucks by excluding the freight charges of

the fifth truck is also not correct. As such, the judgment of the trial court is

liable to be set aside on these aspects.